Inflation

Bessent spoke a week after Democrats won several key elections by zeroing in concerns over the cost of living, including housing, groceries, utilities and health care. Trump himself has rebuffed such concerns.

The Bureau of Labor Statistics released its latest Consumer Price Index reading Friday morning, showing inflation rose by 0.3% in September, slightly below August's pace. The report also found core inflation steady at 3.0%, even as shelter costs eased and gasoline prices spiked.

Federal Reserve Governor Stephan Miran floated the idea of conducting monetary policy with an eye toward the neutral rate and suggested that the president's immigration and fiscal policies will exert downward pressure on inflation.

The pressure from President Donald Trump and his allies on the Fed to slash interest rates underscores the need to retain credibility on fighting inflation, the former Treasury chief added.

Treasuries climbed across the curve, driving two-year yields down three basis points to 3.51%. Money markets almost fully priced in three Fed reductions by the end of 2025.

Investors are anticipating the annual preliminary benchmark revision of US payrolls data. Further signs of softening could further raise expectations for Fed easing.

The attention will now turn to reports on producer prices and consumer prices, due Wednesday and Thursday, for signals of how quickly the Federal Reserve will lower borrowing costs.

Debt markets globally were roiled this week as the yield on the 30-year Treasury rose to almost 5% before easing in the past two sessions.

Yields on two- to five-year notes rose at least two basis points to session highs after the U.S. economy's second-quarter growth rate was revised to 3.3% from 3%, exceeding economist expectations.

In minutes from the Fed's July meeting, officials highlighted the risks of inflation outweighing concerns over the labor market, which investors overlooked.

U.S. consumers probably experienced a slight pickup in underlying inflation in July as retailers gradually raised prices on a variety of items subject to higher import duties.

Officials are balancing food and retail payroll tax and wage inflation risks against mounting jobs losses and a "subdued" economy that could dampen future price pressures.

Two policymakers have suggested they might support a cut at the July meeting, but most others have signaled they want more time to assess the impact of tariffs on inflation.

The recent rally was driven by economic data that reinforced wagers on at least two rate cuts this year, as well as speculation President Donald Trump will name a more dovish successor to Jerome Powell.

The Federal Reserve's preferred measure of inflation moved further from its 2% target, underscoring the central bank's reluctance to cut rates.

Markets are currently wagering the US central bank will cut interest-rates once more with around a 70% chance of a second move this year.

Price growth continued to trend toward the Federal Reserve's 2% target, but not enough to spur action from the central bank.

Federal Reserve Gov. Michael Barr said global supply chain disruptions and inflation caused by tariffs could weigh heaviest on small businesses, especially those with little access to credit.

The slowdown reflected a decline in energy costs, used vehicles, and airfares. Motor vehicle insurance — a main source of inflation in recent years — also retreated.

The growing fears about the outlook for the global economy extended far beyond stocks. Oil tumbled on speculation demand will slow.